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St. Louis Post-Dispatch Consumer Central column

Nov 09, 2012 (St. Louis Post-Dispatch - McClatchy-Tribune Information Services via COMTEX) --
Buying products online with cash is a concept that at first can be difficult to grasp.

The very idea might conjure up a scene from a science fiction movie where people might beam wads of dollar bills directly into the Internet.

Well, that future has arrived -- sort of -- albeit through less high-tech and more cumbersome means.

Wal-Mart and Toys R Us have both rolled out programs to help their customers who don't have credit cards make purchases online. After selecting the items you want to buy online, consumers can now click a cash option at checkout at those retailers' websites.

Customers then have 48 hours to visit a Walmart or Toys R Us store, where they can take their order confirmation and pay for the items with cash -- or whatever payment they prefer -- and have the items delivered to the store for pickup or to their homes.

Most retailers offer a much larger selection of products online than they do in their stores, so services like these make that larger inventory more readily available to more people.

But these in-store payment services are not an option for e-retailers such as Amazon that don't have physical stores. So instead, you can buy Amazon gift cards with cash at many drugstores and grocery stores.

There is also a small but growing field of third-party services that provide an alternative avenue to Amazon and other e-retailers via cash.

One of them is Coinstar -- those green machines in the front of a lot of grocery stories where people often cash out their coins. Instead of getting a cash payout for coins (and dollars), Coinstar gives users an option to put the amount on a gift card to about 40 different retailers including Amazon, Overstock, iTunes, J.C. Penney and Old Navy. Those gift cards can be redeemed online.

"It's become increasingly popular since it's a great way to be able to purchase online without having to incur credit card debt or anything like that," said Martha Belden, a Coinstar spokeswoman. "It really opens up the power of buying things online."
She added that there is no fee for having your cash converted to a gift card at a Coinstar machine. But there is a fee for redeeming your coins for cash.

Another service is a startup called Paynearme.com that allows customers to get a gift card to Amazon by making an in-store payment at a nearby 7-Eleven. There are a number of steps in this process, but it's also an option.

So now you may be wondering why people would want to go through all of these extra hurdles to buy items online with cash.

Well, about 8.2 percent of U.S. households are "unbanked," meaning they don't have a savings or checking account, according to the Federal Deposit Insurance Corp. The percentage is even higher in the St. Louis region, where about 9.7 percent of households are unbanked.

"When you think about Wal-Mart's core customer, a decent amount of them don't have access to credit cards or bank accounts," said Brian Yarbrough, a retail analyst with Edward Jones in Des Peres.

So the paying with cash program "definitely makes sense for the core Wal-Mart customer. Does it make sense for Tiffany's Probably not," he said.

One eye-opening statistic is that only 15 percent of transactions inside Walmart stores are paid for with credit cards.

A lot of people also are wary of paying for things online with their credit card for fear of fraud or theft.

"There are some people like my parents who say they will never buy anything on the Internet," Yarbrough said. "It only takes once for someone to get their credit card number stolen."
That concern appears to be a big driver to Wal-Mart's "Pay with Cash" program so far. Wal-Mart officials have said that 40 percent of the customers who have used the system since it was rolled out in April ended up paying for the items in the store with a noncash option such as a credit card or check.

It's probably not a coincidence that more of these programs are coming out at a time when layaway programs are also seeing a resurgence.

"It's a tough environment out there," Yarbrough said. So retailers are trying to grab every dollar they can by giving cash-strapped consumers more opportunities to shop with them.

So should we expect to see Target and other retailers rolling out similar pay-with-cash online programs in the near term
Yarbrough was skeptical -- at least when it comes to Target. After all, it hasn't gotten into the layaway game yet, and its customers tend to have higher incomes than Wal-Mart customers, he said.

But, he said, if Wal-Mart finds a lot of success with it and Target begins to lose business because of it, who knows
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